Lottery Information

Lottery

A lottery is a popular form of gambling which involves the drawing of lots for a prize. Some governments forbid it, while others endorse it to the extent of organizing a national lottery. It is common to find some degree of regulation of lottery by governments.

The first signs of a lottery trace back to Asia, where ancient Keno slips were discovered. First played in China, the lottery has helped finance major governmental projects like the Great Wall of China.

Lotteries come in many formats. The prize can be fixed cash
or goods. In this format there is risk to the organizer if insufficient
tickets are sold. The prize can be a fixed percentage of the receipts.
A popular form of this is the "50-50" draw where the organizers promise
that the prize will be 50% of the revenue. The prize may be guaranteed
to be unique where each ticket sold has a unique number. Many recent
lotteries allow purchasers to select the numbers on the lottery ticket
resulting in the possibility of multiple winners.

Lotteries are most often run by governments or local states and are sometimes described as a regressive tax,
since those most likely to buy tickets will typically be the less
affluent members of a society. The astronomically high odds against
winning have also led to the epithets of a "tax on stupidity" or "math
tax." The phrase is largely rhetorical (playing the lottery is
voluntary; taxes are not), but it is intended to suggest that lotteries
are governmental revenue-raising mechanisms that will attract only
those consumers who fail to see that the game is a very bad deal.
Indeed, the desire of lottery operators to guarantee themselves a
profit requires that a lottery ticket be worth substantially less than
what it costs to buy. After taking into account the present value
of the lottery prize as a single lump sum cash payment, the impact of
any taxes that might apply, and the likelihood of having to share the
prize with other winners, it is not uncommon to find that a ticket for
a typical major lottery is worth less than one third of its purchase
price.

The fact that lotteries are commonly played leads to some
contradictions against standard models economic rationality. However,
the goal of some players may not be to win the game, but merely to have
a thrill and indulge in a fantasy of possibly becoming wealthy. This is
particularly popular among those who believe their chances of becoming
rich are already zero, so even if the lottery's odds are awful, they
are better than zero.

Africa

Australia

Country Lottery details

Lottery in the United States

In the United States,
the existence of lotteries is subject to the laws of each state; there
is no national lottery. Before the advent of state-sponsored lotteries,
many illegal lotteries thrived; for example, see Numbers game and Peter H. Matthews. The first modern state lottery in the U.S. was established in the state of New Hampshire in 1964; today, lotteries are established in forty-one states and the District of Columbia. On October 8, 1970, New York held the first million dollar lottery drawing.

The first modern interstate lottery in the U.S. was Tri-State Lotto.
Tri-State Lotto was formed in 1985 and linked the states of Maine, New Hampshire and Vermont. In 1988, the Multi-State Lottery Association was formed with Oregon, Iowa, Kansas>, Rhode Island, West Virginia and the District of Columbia as its charter members; it is best known for its "Powerball" drawing, which is designed to build up very large jackpots. Another interstate lottery, The Big Game (now called Mega Millions), was formed in 1996 by the states of Georgia, Illinois, Massachusetts, Maryland, Michigan and Virginia as its charter members.

Instant tickets, also known as scratch cards, were first introduced
in the 1970s and have since become a major source of state lottery
revenue. Some states have introduced keno and video lottery terminals (slot machines in all but name).

With the advent of the Internet it became possible for people to
play lottery-style games on-line, many times for free (the cost of the
ticket being supplemented by merely seeing, say, a pop-up ad). Some of
the many websites which offer free games (after registration) include
www.iwinweekly.com and the larger iwon.com, which is backed by the CBS
broadcasting corporation. GTech Corporation, in the United States, administrates 70% of the worldwide online and instant lottery business, according to its website.

Lottery in Canada

The first lottery in Canada was Quebec's Inter-Loto in 1970. Other
provinces and regions introduced their own lotteries through the 1970s,
and the federal government ran Loto Canada (originally the Olympic
Lottery) for several years starting in the late 1970s to help recoup
the expenses of the 1976 Summer Olympics.
Lottery wins are generally not subject to Canadian tax, but may be
taxable in other jurisdictions, depending on the residency of the
winner.[2]

Today, Canada has two nation-wide lotteries: Lotto 6/49 (which started in 1982), and Lotto Super 7
(which started in 1994). These games are administered by the
Interprovincial Lottery Corporation, which is a consortium of the five
regional lottery commissions, all of which are owned by their respective provincial and territorial governments:

Lottery in France

The first known lottery in France was created by King Francis I in or around 1505. After that first attempt, lotteries were forbidden for two centuries.

They reappeared at the end of 17th century, as a "public lottery" for the Paris municipality (called Loterie de L'Hotel de Ville) and as "private" ones for religious orders (mostly for nuns in convents).

Lotteries became quickly one of the most important resources for religious congregations in the 18th century.

Lotteries helped to build or rebuild many churches (about 15
including the biggest ones) in Paris during the 18th century, including
St Sulpice and Le Panthéon.

At the beginning of the century, the King avoided having to fund
religious orders by giving them the right to run lotteries, but the
amounts generated became so large that the second part of the century
turned into a struggle between the monarchy and the Church for control
of the lotteries. In 1774, the Loterie de L'École Militaire was founded by the monarchy (by Mme de Pompadour to be precise, to buy what is called today the Champ de Mars in Paris, and build a Military Academy that Napoleon Bonaparte would later attend) and all other lotteries, with 3 or 4 minor exceptions, were forbidden.

This lottery became known a few years later as the Loterie Royale de France. Just before the French Revolution in 1789 the revenues from La Lotterie Royale de France were equivalent to between 5 and 7% of total French revenues.

Throughout the 18th century, philosophers like Voltaire as well as some bishops complained that lotteries exploit the poor. This subject has generated much oral and written debate over the morality of the lottery.

All lotteries (including state lotteries) were frowned upon by idealists of the French Revolution, who viewed them as a method used by the rich for cheating the poor out of their wages.

The Lottery reappeared in France in 1936, called loto, when socialists needed to increase state revenue. Since that time, La Française des Jeux (government owned) has had a monopoly on most of the games in France, including the lotteries.

Probability of winning

The chances of winning a lottery jackpot
are principally determined by several factors: the count of possible
numbers, the count of winning numbers drawn, whether or not order is
significant and whether drawn numbers are returned for the possibility
of further drawing.

In a typical 6 from 49 lotto, 6 numbers are drawn from 49 and if the
6 numbers on a ticket match the numbers drawn, the ticket holder is a
jackpot winner - this is true regardless of the order in which the
numbers are drawn. The odds of being a jackpot winner are approximately
1 in 14 million (13,983,816 to be exact). The derivation of this result
(and other winning scores) is shown in the Lottery Mathematics article.

To put these odds in context, suppose one buys one lottery ticket
per week. 13,983,816 weeks is roughly 269,000 years; In the
quarter-million years of play, one would only expect to win the jackpot
once.

The odds of winning any actual lottery can vary widely depending on
lottery design. "Powerball" is a very popular multistate lottery in the
United States which is known for jackpots that grow very large from
time to time. This attractive feature is made possible simply by
designing the game to be extremely difficult to win: 1 chance in
146,107,962. That's over ten times smaller than the example
above. Powerball players also pick six numbers, but two different
"bags" are used. The first five numbers come from one bag that contains
numbers from 1 to 55. The sixth number -- the "Powerball number" --
comes from the second bag, which contains numbers from 1 to 42. To win
a powerball jackpot, a player's five regular numbers must match the
five regular numbers drawn and the Powerball number must match
the Powerball number drawn. In other words, it is not good enough to
pick 10, 18, 25, 33, 42 / 7 when the drawing is 7, 10, 25, 33, 42 / 18.
Even though the player picked all the right numbers, the Powerball
number at the end of the ticket doesn't match the one drawn, so the
ticket would be credited with matching only four numbers (10, 25, 33,
42).

Most lotteries give lesser prizes for matching just some of the
winning numbers. The Powerball game described above is an extreme case,
giving a very small payout (US$3) even if a player matches only the
Powerball number at the end of your ticket. Matching more numbers, the
payout goes up. Although none of these additional prizes affect the
chances of winning the jackpot, they do improve the odds of winning
something and therefore add a little to the value of the ticket.

The expected value of lottery bets is often notably bad. In the
United States, an expected value of -50% is not atypical. This has led
some people to deride lotteries as "the math tax" or a "tax on
stupidity."

Notable prizes

Prize

Lottery

Country

Name

Date

Notes

$365m (€306m, £210m)

Powerball

United States

One ticket bought jointly by eight co-workers at a Nebraska meat processing plant

On 20 September 2005 a primary school boy in Italy won £27.6 million
in the national lottery. Although children are not allowed to gamble
under Italian law, children are allowed to play the lottery. [3]

Payment of prizes

Winnings are not necessarily paid out in a lump sum, contrary to the
expectation of many lottery participants. In certain countries, such as
the USA, the winner gets to choose between an annuity payment and a
one-time payment. The one-time payment is much smaller, indeed often
only half, of the advertised lottery jackpot, even before applying any withholding tax
to which the prize may be subject. The annuity option provides regular
payments over a period that may range from 10 to 40 years.

In some online lotteries, the annual payments can be as little as
$25,000 over 40 years, with a balloon payment in the final year. This
type of installment payment is often made through investment in
government-backed securities. Online lotteries pay the winners through
their insurance
backup. However, many winners choose to take the lump-sum payment,
since they believe they can get a better rate of return on their
investment elsewhere.

In some countries, lottery winnings are not subject to personal income tax,
so there are no tax consequences to consider in choosing a payment
option. In Canada and Australia, all prizes are immediately paid out as
one lump sum, tax-free to the winner.

Scams and Frauds

Lottery like any mechanism is susceptible to fraud despite the high
degree to scrutiny offered by the organisers. One method involved is to
tamper the machine used for the number selection. By rigging a machine
it is theoretically easy to win a lottery. This act is often done in
connivance with an employee of the lottery firm. Methods used vary;
loaded balls where select balls are made to popup making it either
lighter or heavier than the rest. Many other ingenious methods too have
been employed.

Some scams on the internet too are based on lotteries. The modus operandi of this fraud is the trickster sends spam
to all email users in their database congratulating them on their
recent lottery win. Then they proceed to announce that in order to
release funds they must part with a certain amount (as tax/fees) as per
the rules or risk forfeiture. Some unsuspecting users might fall prey
to this scandal and part with their money falling into their trap,
where they continue to pay as they are misled by the scamsters who dupe
their clients into believing that they are always one step closer to
the money. The swindlers also might use telephone or printed letters to
approach victims to execute their plan more professionally.

Another form of lottery scam involves the selling of "systems" which
purport to improve a player's chances of selecting the winning numbers
in a Lotto game. These scams are generally based on the buyer's (and
perhaps the seller's) misunderstanding of probability and random
numbers.